Small business owners often complain about being “choked” by ever-increasing mandated benefits, but rarely do you see their complaints presented in a clear and compelling way. An exception took place during coverage of the very latest mandated benefit in California: sick leave for part-time employees, which just took effect this month.
Following on the footsteps of the state’s recent increase in the minimum wage, Juan Areliz, owner of the Panadería México (“Mexico Bakery”) in Van Nuys, California, voiced sentiments no doubt shared by many fellow small business owners throughout the state.
JUAN ARELIZ, BAKERY OWNER: Every day they strangle us more. Me, for example, people ask me, do you own a business? Look, I used to own a business. Now, I have a job, and a badly paid one.
To be sure, the report by Telemundo’s María Paula Ochoa also included the “pro-sick days for part-timers” perspective of several part-time workers, but Areliz’s comment certainly stood out as the most noteworthy and sobering quote on the subject.
As reported by Ochoa, California has enacted the new benefit for more than 6 million part-time employees, who are now entitled to a minimum of three paid sick days off a year. Specifically, after working in a company for 30 days, workers are now entitled to one paid sick leave hour per 30 hours of labor.
Areliz’s articulation of the negative impact of mounting mandated benefits represents yet another validation of the phenomenon explained by American Enterprise Institute scholar Marvin H. Kosters in his article Mandated Benefits-On the Agenda, by which politicians promise new benefits and impose the cost on business.
These mandated benefits come with mandated costs, which “are financed by taxes levied on employers. In each case the actual incidence of the tax is likely to rest primarily on workers because the total cost of hiring additional workers includes the taxes paid to finance their benefits.” A simple economic reasoning that explains how entrepreneurs like Areliz are actually negatively impacted by this kind of “new benefit.”
The relevant portions of the referenced Telemundo national newscast appears below:
Noticiero Telemundo 06/28/2015 6:30 PM
MARIA CELESTE ARRARAS, HOST: In California more than 6 million part-time workers will have the right to paid sick days. This is news being celebrated among the workers, of course, but not by small-business owners who are very fearful. Maria Paola Ochoa is in Los Angeles. Maria Paola tell us more.
…
MARIA PAOLA OCHOA, CORRESPONDENT: Juan is the owner of this bakery, and while he says that he’s happy for the employees, he fears the minimum wage hike and these additional benefits will adversely affect his business.
JUAN ARELIZ, BAKERY OWNER: Every day they strangle us more. Me, for example, people ask me, do you own a business? Look, I used to own a business. Now, I have a job, and a badly paid one.
MARIA PAOLA OCHOA, CORRESPONDENT: The law also prohibits employers from taking any sort of reprisal against workers who’d use these benefits.
